Room ACs buck the trend as other consumer durables face heat 

B. Thiagarajan, MD, Blue Star India Ltd.
| Photo Credit:
BIJOY GHOSH

Room airconditioners remain an exception among consumer durables in terms of their robust demand, a top executive of a leading AC manufacturer said.

Compared with FMCG and other consumer durables that have been logging either flat or negative growth rates since last year, the room AC (RAC) category has emerged as an exception. RAC sales in March too are doing extremely well, Blue Star MD B. Thiagarajan said, attributing multiple contributing factors.

While harsher summer remains the key, something that pushed up the sales to an unprecedented level last year, other aspects driving the demand are stable product prices as well as improved access to consumer finance. Almost 40% of the total sales is happening through consumer finance, Mr. Thiagarajan said in an interaction during the unveiling of the company’s new range of ACs here recently.

Helping perk up the demand from households are people getting used to air-conditioned environment everywhere, in offices, cars, restaurants, metro rail and buses. Another trend working in the favour of RACs is people retaining the same smartphone for longer period or in other words taking time to replace the handsets. This leaves more disposable income in their hands, which in turn augurs well for RACs. The Union Budget announcement pertaining to income tax are also bound to contribute to the RAC sales, he said, adding the demand for RACs continued even after last summer, though not at the same rate, into the festival season and New Year.

On the road ahead, he said Bluestar grew at a rate better that the industry last year and is well positioned to meet the rising demand as it has completed a capacity expansion programme at its plant in Sri City.

In FY25, the capacity at the facility in Andhra Pradesh was 6.5 lakh units, which since has been increased to 8.5 lakh units. In FY27, this will move to 12 lakh at an estimated investment of ₹150 crore. The company has additional 40 acre (in Sri City II) on which it may consider setting one more plant beyond FY28. From FY27, the existing facility in Sri City will also get into commercial refrigeration production.

The company also has RAC production facility in Himachal Pradesh that are operating at their capacity of 6.5 lakh units. Bluestar, which forayed into the residential AC segment in 2011 is on course to end this fiscal with a 13.75% market share as against the 13.5% in FY24. It is eyeing 14.25% market share in FY26.